Warehouses demolished to avoid tax

Some landlords could be forced to demolish empty warehouses in order to avoid paying tax on unoccupied sites following the government’s decision to scrap rate relief.

Since 1st April 2008 the Empty Property Rates Rules changed substantially for unused warehouses which are now liable after six months to pay the same rate as if they were occupied. It has been estimated that on a typical 10,000 sq m warehouse the potential rates bill could reach a quarter of a million pounds a year.

Roger Williams, chief executive officer of United Kingdom Warehouse Association said it has heard of a number of reports of property owners demolishing empty buildings to avoid the tax.

He said: “Industrial landlord, O&H Q7, has apparently started demolishing a fifth of a business park in Sunderland and is said to be planning to demolish a further 37,000 ft of the 750,000 ft park following the introduction of the rate changes.

“Meanwhile, storage company Vanguard Holdings has knocked down an empty pub it owned in west London to make a stand against the empty property tax hike. After the pub was reduced to rubble, Vanguard hoisted a sign over the remains of the building that said: ‘Sorry Mr Brown – no empty rates on this one’.”

Williams said the organisation is keen to hear from any industrial property owners who have been affected by the change in regulation: “We have heard lots of anecdotal evidence from our members of property owners demolishing empty property to avoid the tax. However, it is very important that UKWA is furnished with facts about precisely how the change in regulations is actually affecting your company and I would welcome feedback from all parties so that UKWA can lobby parliament on this issue.”

According to UKWA, Linda Riordan, Labour MP for Halifax, has received support from 35 MPs for the tabling of an early day motion to reintroduce empty property tax relief as given in the Rating Act 2007.

However, Williams said: “this EDM (like most of them), is unlikely to be debated. Its purpose is rather to publicise the issue, and to demonstrate the extent of parliamentary support for a particular cause.”

If you are aware of any warehouses that have been demolished due to the change in rates regulations please let us know. Contact Lucy Tesseras via email: lucy.tesseras@centaur.co.uk.